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Recycling markets and opportunities for local government recycling program expansion.

Recycling markets and opportunities for local government recycling program expansion. - Page 1

Recycling Markets and Opportunities for - 1 - August 2000
Local Governments Recycling Program Expansion
Recycling Markets and Opportunities for Local
Government Recycling Program Expansion
Overview
It is commonly argued that there are limits to recycling because of lack of markets or weakness in
markets. However, the experience of many North Carolina local governments has shown that
markets are adequate and allow for program expansion. Moreover, markets have consistently
indicated their desire to consume more materials ( see Markets Prospectus below). Local
governments have the power to strengthen markets through buy recycled programs. They also
have the power to make their programs more efficient and work more effectively with markets. In
short, recycling markets allow local governments to expand and improve programs; taking
advantage of the opportunities to do so can result in greater cost- efficiency.
How Recycling Markets Work
Recyclable materials are commodities. They have value to manufacturers as “ feedstock” to make
products. Many industries increasingly depend on recycled materials to make products.
Markets in their simplest form are relationships between suppliers and demanders. The major
commodity industries ( paper, plastic, metals, glass, etc.) are continuing to make a demand shift
toward recycled materials, partly in response to supplies available from local government curbside
and drop- off programs and to the growing demand for recycled products.
The commodity industries are making decisions every day on which feedstocks they will use to
make their products. A rising level of commitment from suppliers ( local governments) and
demanders ( industry) of recycled feedstock has been the pattern of the 1990s. These
commitments and the associated market relationships can easily grow. Industry will decidedly not
invest in new recycled capacity if suppliers ( e. g., local governments) draw back from their
commitment. They will respond with new capacity as supply increases. The paper industry, for
example, invested in over 10 million tons in new recycled paper- making capacity in the 1990s.
Moving a recycled material from a home or business to a market requires three main steps. It
must be collected, processed ( e. g., baled or crushed) for efficient transport, and delivered to a
manufacturing plant to be remade into new products. Each of these steps has costs, but there are
opportunities for revenues as well. Revenues depend on many things: for example, the kind of
material, who is responsible for what steps, and what the manufacturer is able to sell their product
for. Recyclable commodities are also part of the general global trade in commodities and they
compete with virgin materials, so worldwide economic forces can affect prices.
As with any commodity or product, there is a relationship but also a difference between prices
paid for a material and the demand for the material. Gasoline, for example, is in constant demand,
but gasoline process fall or rise in response to many factors. Prices can fluctuate for any number of
reasons, but that does not mean that demand does not exist. For example, prices paid for recycled
PETE plastic ( soda bottles) have been subdued in recent years because of low oil prices and a large
competing virgin supply. However, there has been consistent demand for PETE even at these low
prices and no local government or processor has been turned away from the market.
N. C. DIVISION
OF POLLUTION
PREVENTION AND
ENVIRONMENTAL
ASSISTANCE
1639 Mail Service Center
Raleigh NC 27699- 1639
( 919) 715- 6500
( 800) 763- 0136

Recycling Markets and Opportunities for - 1 - August 2000
Local Governments Recycling Program Expansion
Recycling Markets and Opportunities for Local
Government Recycling Program Expansion
Overview
It is commonly argued that there are limits to recycling because of lack of markets or weakness in
markets. However, the experience of many North Carolina local governments has shown that
markets are adequate and allow for program expansion. Moreover, markets have consistently
indicated their desire to consume more materials ( see Markets Prospectus below). Local
governments have the power to strengthen markets through buy recycled programs. They also
have the power to make their programs more efficient and work more effectively with markets. In
short, recycling markets allow local governments to expand and improve programs; taking
advantage of the opportunities to do so can result in greater cost- efficiency.
How Recycling Markets Work
Recyclable materials are commodities. They have value to manufacturers as “ feedstock” to make
products. Many industries increasingly depend on recycled materials to make products.
Markets in their simplest form are relationships between suppliers and demanders. The major
commodity industries ( paper, plastic, metals, glass, etc.) are continuing to make a demand shift
toward recycled materials, partly in response to supplies available from local government curbside
and drop- off programs and to the growing demand for recycled products.
The commodity industries are making decisions every day on which feedstocks they will use to
make their products. A rising level of commitment from suppliers ( local governments) and
demanders ( industry) of recycled feedstock has been the pattern of the 1990s. These
commitments and the associated market relationships can easily grow. Industry will decidedly not
invest in new recycled capacity if suppliers ( e. g., local governments) draw back from their
commitment. They will respond with new capacity as supply increases. The paper industry, for
example, invested in over 10 million tons in new recycled paper- making capacity in the 1990s.
Moving a recycled material from a home or business to a market requires three main steps. It
must be collected, processed ( e. g., baled or crushed) for efficient transport, and delivered to a
manufacturing plant to be remade into new products. Each of these steps has costs, but there are
opportunities for revenues as well. Revenues depend on many things: for example, the kind of
material, who is responsible for what steps, and what the manufacturer is able to sell their product
for. Recyclable commodities are also part of the general global trade in commodities and they
compete with virgin materials, so worldwide economic forces can affect prices.
As with any commodity or product, there is a relationship but also a difference between prices
paid for a material and the demand for the material. Gasoline, for example, is in constant demand,
but gasoline process fall or rise in response to many factors. Prices can fluctuate for any number of
reasons, but that does not mean that demand does not exist. For example, prices paid for recycled
PETE plastic ( soda bottles) have been subdued in recent years because of low oil prices and a large
competing virgin supply. However, there has been consistent demand for PETE even at these low
prices and no local government or processor has been turned away from the market.
N. C. DIVISION
OF POLLUTION
PREVENTION AND
ENVIRONMENTAL
ASSISTANCE
1639 Mail Service Center
Raleigh NC 27699- 1639
( 919) 715- 6500
( 800) 763- 0136